Cloud software company Blackbaud, Inc. (NASDAQ: BLKB) seems to be poised for a price surge as per its latest charts. There are quite a few bullish indications for Blackbaud.
#1 Retest after Breakout from Flag: The stock was in an uptrend until mid-July 2017.
This is a classic flag pattern.
BLKB broke out of the flag on October 26, 2017, and continued its uptrend.
After a few weeks of upward move, the stock has now corrected to the breakout level once again, making this a good buy point.
#2 Hammer Candlestick: The daily chart of BLKB shows that the latest candlestick is a hammer. This is a bullish reversal candle. This was also formed at the support level, making it even more valid.
#3 MACD-Price Positive Divergence: As you can see from the daily chart of BLKB below, there is a positive divergence between MACD and price. Blackbaud’s price is making lower lows while the MACD Histogram is making higher lows. This is called a positive divergence and is marked on the chart as the blue dotted line. A positive divergence usually means that the selling momentum is reducing and the previous price trend will resume. This means that the stock may start moving upwards again.
#4 Support near 20-Week SMA: The weekly chart of Blackbaud shows that the stock has currently taken support near its 20-Week SMA (shown in pink color).
#5 Trend Line Support: As you can see from the weekly chart of BLKB, the stock has been on an uptrend for the past few months. The stock has been making higher highs and higher lows indicating an uptrend. The stock has consistently taken support at its trend line as seen from the weekly chart below. The stock is currently near its trend line, indicating a good buying opportunity.
As seen from the chart, RSI has taken support near the 50-level. This also indicates that the uptrend might resume.
Recommended Trade (based on the charts)
Buy Price: If you want to get in on this trade, you can purchase shares of BLKB at the current price of $94.32.
TP: Our target price is the previous high price of $104.30.
SL: To limit risk, place a stop loss below the low of the hammer candlestick at $92.35. Note that the stop loss is on a closing basis.
Our target potential upside is almost 10.6% in the next 4 months.
For a risk of $1.97, our target reward is $9.98.
In other words, this trade offers nearly 5x more potential upside than downside.
Risks to Consider
The stock may reverse its overall trend if it breaks down with high volume from the support level of daily chart and trend line of the weekly chart. The sell-off of the stock could also be triggered in case of any negative news, overall weakness in the market, or any regulatory changes in the sector.